A global view of finance

When you read the financial literature, you find that there are many articles about the difficulty of finding the start-up funds for a new business. You have read how venture capital firms are pulling back from making such loans; so are the banks. In short this is a very difficult time to get financing for a new business venture.

Think of how difficult it will be, therefore, for new business ventures in South Africa, Poland, Hungary, China, and other newly developing countries to get financing. The risks are great, and the managerial expertise is sometimes limited. Yet the future growth of the whole world depends on the growth of entrepreneurship throughout the world.

What can be done to help the entrepreneurs of developing countries get the financing they need to start new ventures? One answer is for firms in the developed countries to set up joint ventures with firms in the developing countries. Such joint ventures will open new-markets for the firms of the developed countries and provide the financing needed by less developed countries (LCD's). Another answer is for venture capital firms to expand worldwide. The risk may be great, but the potential for gain is just as great. Often the capital needs of firm in less developed countries are relatively small. Sometimes $1,000 is all that is needed. The government could promote such an investment by giving tax breaks to those firms and individuals that provide capital for entrepreneurs in LCDs.


Money is commonly accepted as a means of paying for the goods and services individuals need and want. Money enables us to function in society and to have the things we need to survive - things such as housing, food, clothing, transportation, heat and water.

Money has not always been the coins and paper bills known to us. Throughout history various things of value have been used as money. For example, in many parts of the ancient world, salt was used as money because it was rare and necessary to life. Among many early cultures, furs or pelts were used as money, eventually valuable metals became the most common type of money; in fact, gold coins were used as money in the United States as recently as 1933.

Currency, which is dollar bills and coins, fits most of the definition of money. However, checks are accepted as payment for purchases, and checking account deposits are considered money and not currency. To define money as currency would be considered too narrow for most economists.


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THE ROLE OF FINANCE | Function of money

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